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NOV 7, 2011 — CASH CUSHION

MONEY IN THE BANK: PILING UP A

MOUNTAIN OF (TAXPAYER) MOOLA

By Robert Reed

The majority of the 20 suburban Cook County townships hoard large amounts of cash that’s in excess of the "rainy day" fund that municipal finance experts recommend. Some townships have enough cash to cover a full year’s expenses without going to taxpayers.

The majority of the 20 suburban Cook County townships carry large amounts of cash; 11 have more than 40 percent of their total assets in cash and cash equivalent assets, according to the townships’ balance sheets. Leading the pack is:

  • Thornton with $14.6 million in cash (42 percent of assets);
  • Lyons had $13 million (65 percent);
  • Stickney had $9.2 million (45 percent);
  • Hanover had $8.5 million (48 percent); and
  • Wheeling had $5.8 million (51 percent).

Such reserves are in excess of what municipal finance experts recommend as a "rainy day" fund—enough cash on hand to cover operating expenses for three to six months in case of a financial crisis.

For example, in fiscal 2010, Thornton reported total expenditures/expenses of $12.8 million. Based on those obligations, Thornton has enough money in the bank to cover expenses for more than 12 months. Lyons reports expenditures/expenses of $8.1 million—nearly $5 million less that its reserve.

Even some other township supervisors are wondering about the need for such abundant cash resources.

"Townships should not be in the business of hoarding taxpayer money," says Sam Yingling, supervisor for Lake County’s Avon Township. "Anything over six months needs to be looked at."

Holding that much cash is morally wrong and a bad business practice agrees David Hamilton, a township expert and former chair of the Department of Political Science and Public Administration at Roosevelt University who wrote an in-depth analysis on Illinois townships in April 2008, including the 20 in suburban Cook County, which also found the majority had big cash coffers.

"It’s unconscionable there (are) such large reserves," says Hamilton, who is now Director of the Public Administration Program at Texas Tech University. "Why not leave the money with the taxpayers, rather than put them in the township’s bank?"

When asked to address why these townships hold so much cash, Cook County township spokesman Robert Porter said its reflective of the townships’ "conservative management" philosophy that calls for keeping lots of money on hand to pay for major purchases such as trucks, snowplows or buildings.

Thornton County Supervisor Frank Zuccarelli notes his township’s $14.6 million is the "largest surplus we’ve ever had." However, he adds that the township recently paid $2.2 million to purchase a new garage and make related construction improvements to house 45 township vehicles, including trucks, buses and snowplows.

Another construction project is being planned but won’t likely happen until next year, he adds.

Stickney Township Supervisor Louis Viverito says his township’s cash reserves are now closer to a "couple of million" dollars because it used some of the funds on the new Stickney Public Health Center, which opened in July complete with a ribbon-cutting ceremony attended by Illinois House Speaker Michael J. Madigan (D-Chicago).

At a time when many levels of government have racked up huge amounts of crushing debt, it begs the question: Isn’t the township approach to finance a better course of action?

Townships authorities say yes. But Hamilton doesn’t agree.

"If there (are) large reserves, there’s an incentive to spend them," says Hamilton, who adds that townships often draw down their cash holdings by overpaying for the few services they provide, especially road maintenance, construction and repairs.

BGA Director of Programming & Investigations Robert Reed Talks Townships by wdcbnews

>> Data, Resources & Acknowledgements

DATA: Townships Roads Costs—Cook, Kane, Lake, Will, DuPage, McHenry (Excel)
DATA:
Suburban Cook County Townships Roads—"Costs-Per-Mile" (Excel)
DATA:
Suburban Cook County Townships Assets, Liabilities and Cash (Excel)

DOCS: IDOT Townships Study, 2008 (Document Cloud)
DOCS:
"Local Democracy and the Townships of Illinois: A Report to the People," (PDF)
DOCS:
"Township Government Essential or Expendable? The Case of Illinois and Cook County" (Document Cloud)

The following BGA staffers and contributors worked on the Rescuing Illinois township project:
Robert Reed, director of investigations and programming; Robert Herguth, editor of investigations; Patrick Rehkamp, senior investigator; Andrew Schroedter, investigator; James Edwards, former BGA investigator
; Web Design & Illustrations: Solomon Lieberman, Taniesha Robinson and Adam Verwymeren; Policy Adviser: Emily Miller; Copy Editor: Jessica Curry; Interns: Ricardo Torres, Melanie Zanona and Michael Sandler; Freelance Reporter/Investigator: John Carpenter; and Data Provider: Metro Chicago Information Center.

 

RESCUING ILLINOIS

An ongoing series of in-depth reports about improving and reforming state government.


WHAT'S THE PRO-TOWNSHIPS ARGUMENT?

Curious what the defenders of townships have to say? READ IT HERE.


DATA & RESOURCES

See the numbers and sources behind this investigation, plus related links.


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